Wednesday, October 30, 2013

Government removes deposit ceiling for co-operatives

Ministry of Cooperatives and Poverty Alleviation bowing down to
the various cooperatives associations' pressure removed the ceiling on deposit
collection by cooperatives from the proposed cooperative regulation.

The ministry had earlier, provisioned not to allow the cooperatives
to mobilise more than Rs 3 million from a single depositor or more than 10
times the individual’s share in a cooperative.

Earlier, the proposed regulation was planning to ask the
cooperatives with individual deposits exceeding Rs 3 million to bring them down
to the fixed level within six months from the date of implementation of the new
regulation.

Earlier two task-forces – one led by central bank deputy governor Maha
Prasad Adhikari and another led by joint secretary Baikuntha Aryal – had recommended
to fix ceiling on deposits in cooperatives from mobilising deposits more than
their financial capacity to save the depositors and avert the financial risk due
to lack of proper supervision and weak legal provision.

Similarly, the ministry has also become flexible on board members holding
executive positions. "A separate board and management is mandatory in
urban areas, whereas it could not be strictly applied in rural areas," the
ministry added.

Meanwhile, there are some 2,789 cooperatives – by the end
of the last fiscal year 2012-13 – that carry out transactions worth more than
Rs 10 million annually in Kathmandu district. Some 618 have an annual
transaction worth over Rs 50 million, whereas some 18 – 16 from Kathmandu and
two from Jhapa – of them exceed Rs 500 million annual transactions. Likewise,
some 756 cooperatives in Kathmandu have transaction between Rs 10 million and
Rs 50 million annually, with 205 of them doing annual transaction exceeding Rs
50 million, whereas Lalitpur has 50 and Bhaktapur has 28 with annual
transaction exceeding Rs 50 million.